The Myth of the Benevolent Postwar Corporation

Unions, not benevolent corporations, were responsible for the postwar rise in worker income.

AP Photo, FILE

Workers at the end of the assembly line at General Motors plant in Euclid, Ohio, put finishing touches at the cabs of Fisher Body Metal Station Wagons in 1950.

Much as the presidency of Donald Trump has contributed to the retrospective appreciations of George H.W. Bush, so the conduct of American corporations over the past four decades—not to put too fine a point on it: pocketing revenues for their shareholders while stiffing, if not altogether abandoning, their workers—has cast a rosy glow over the American corporations of the post-World War II era.

One commentator bathed in that glow, based on the evidence of his column Monday in The New York Times is David Leonhardt. His column quite rightly bangs the drum for Elizabeth Warren’s bill to require corporations to set aside 40 percent of their board seats for representatives selected by their workers—a slightly watered-down version of German co-determination, but a significant step forward, if ever enacted, in the battle to make corporations responsible not just to their largest shareholders (among whom are their top executives, who are usually compensated in stock).

Leonhardt correctly notes that it was only in the late 1970s that American corporations began hoarding their proceeds for their shareholders and managers. For the preceding 30 years, by contrast, workers’ income rose at the identical rate that productivity did and corporations provided health insurance and pensions.

Why was that? According to Leonhardt, that was because “most executives behaved as if they cared about their workers and communities.” He quotes a famous article by Bill Benton of the ad agency Benton and Bowles that appeared in 1944, suggesting that American business had a higher mission than enriching the rich, and suggests that this became a widely accepted viewpoint in corporate boardrooms.

What you won’t find in Leonhardt’s column is any mention of unions, which renders this analysis akin to Hamlet without the prince. The fact that unions represented one-third of the American workforce when Benton penned his piece, and a good deal more than one-third at major corporations, was overwhelmingly the main reason why corporations compensated their workers more fairly then than they have in recent decades. The contract that General Motors signed with the United Auto Workers in 1950, which set the template for the more equitable contracts of that period, came out of GM’s fear that it might have to endure another 100-plus-day shutdown that the UAW had inflicted on the company in its epochal 1946 strike. And as Jack Metzger has documented in his marvelous book Striking Steel, the 1950s were a decade suffused with major strikes as unions successfully fought to thwart corporations’ proposals that would have pared back the wage and benefit gains that workers had made. (Metzger’s book takes its title from the 1959 Steelworker strike against U.S. Steel, when close to half-a-million workers stayed off the job for 116 days, ultimately compelling the company to maintain and even increase its worker benefits.)

So let’s be clear about what the French call les trente glorieuses—the 30 years after World War II when worker income increased and a mass middle class emerged. It wasn’t the Golden Age of Benevolent Corporations. It was the Golden Age of Unions.